By Tom Kleckner

DES MOINES, Iowa — Following two days of spirited discussion, SPP’s Board of Directors on Tuesday approved a package of 21 recommendations intended to integrate the expansion of renewable energy, boost reliability, and improve transmission planning and the wholesale market.

The recommendations are the product of a final report by the Holistic Integrated Tariff Team (HITT), created last year by the board and Members Committee to review a whole host of the RTO’s models, processes and operations.

Some stakeholders pushed back against the HITT’s recommendation to decouple transmission pricing zones and create new deliverability subregions, suggesting further evaluation is needed. Others expressed their concern with the “all-or-nothing” approach to the recommendations’ approval, saying no one can predict their effect on a “holistic” basis.

Sensing a repeat of the discussion that took place the day before in the Regional State Committee (RSC), board Chair Larry Altenbaumer stepped in and urged the Members Committee to have faith in SPP’s stakeholder process.

“We have a stakeholder process that works,” he said. “Time after time, the stakeholder process … has delivered on results and done a good job of representing the interest of the stakeholders. It would be a disservice to the HITT team and its work to modify their recommendations.”

The 20-member committee supported the recommendations by a 17-2 vote, with Oklahoma Gas and Electric and City Utilities of Springfield (Mo.) opposing. Missouri’s Liberty Utilities abstained.

OG&E filed a seven-page letter with the board outlining its opposition to the HITT report (“misplaced” cost-allocation recommendations, “arbitrarily” shifting costs between zones and the “sheer number” of proposed changes). Greg McAuley said his company had concerns about the stakeholder process, given the potential increase in members without concerns for ratepayers, such as financial players and merchants.

McAuley echoed comments by SPP CEO Nick Brown, who said, “We’ve never seen the magnitude of change in our industry than we’ve seen over the last five years,” when he addressed the head table just before the vote.

“This puts all the ratepayers in this footprint in a vulnerable position, especially with the changes that are coming,” McAuley said. “Things are changing, Nick, more quickly than any of us can comprehend. If we move forward without caution in this, I think the consequences will be more significant than anything we’ve seen in the highway/byway [cost allocation] process.”

Springfield’s Jeff Knottek focused his comments on the HITT’s recommendation that SPP “should” separate its Schedule 9 and 11 transmission pricing zones, allowing the creation of larger Schedule 11 pricing zones and/or Schedule 9 sub-zones. The team noted the zones are largely based on legacy zones that predate SPP’s RTO status in 1994 or date to when transmission owners joined.

“We are a bit leery. I don’t see any words or discussion here of unintended consequences,” Knottek said. “I wish it would say ‘evaluate’ or ‘further study.’ [‘Should’ is] an action term that means go forward and do it.”

Regulator Reluctance

Regulators made similar comments during Monday’s joint stakeholder meeting.

“My concern is overarching. Words matter,” said Oklahoma Corporation Commissioner Dana Murphy, who also filed a letter with the board urging caution. “When I looked at the executive summary, the language made this like, ‘Here’s the implementation plan. Here’s what we are going to do.’ I don’t think the report should tell the RSC to create this, do this. There are a lot of moving parts here.”

“When we try to approach issues at the commission level, we don’t try to throw too many fixes at something at one time, when one or two may fix it,” Texas Public Utility Commission Chair DeAnn Walker said. “I’d like to be able to move forward without throwing too much at this. You’re saying decouple and create. You’re telling the world what to do, and I don’t think that’s appropriate.”

Kansas Corporation Commissioner Shari Feist Albrecht, who served on the HITT, said there is some flexibility within the report.

“It seems like the report builds in the possibility that the RSC may actually reject the recommendation,” she said. “It builds in the uncertainty that exists within the RSC of approving or disapproving.”

Nebraska Public Power District’s Tom Kent, who chaired the HITT, said he was not surprised by the pushback.

“These comments are to be expected,” he said. “Any time an organization goes through change — and this represents the beginning of change — it’s a hard thing to do. Change management becomes critical.”

Saying the HITT effort was the “most significant event of my 37-year career,” Brown said he begged Altenbaumer for the privilege to motion for the recommendations’ approval.

“This is what was needed. We’ve played a game of whack-a-mole for eight years. We’ve seen an issue and tried to hit it with a single team,” he said. “Many of the attributes in our Tariff are relics from 1997. To maintain some of that thinking in today’s world is not a viable option at all.

“I sensed, as the report was coming to a head, a lot of discomfort with the pace of change,” he added. “My argument is that the pace of change is not going to ease up. If that makes you uncomfortable, my suggestion is you better get used to it.”

Kent and HITT Vice Chair Rob Janssen, of Dogwood Energy, reminded stakeholders that nine of the recommendations do urge further evaluation. However, 12 of its recommendations require action that will take place within SPP’s working groups.

“I feel like the product we provided to the board is a new platform for operations,” Janssen said. “The HITT team could have done more; it could have gone on longer. [We] saw 12 clear solutions we could come to consensus on. Some issues in the report are still fairly complex, with a lot of details to work out. I think the stakeholders are up to that challenge.”

Janssen said he and other team members have been meeting with SPP’s working groups over the past three months. “They are ready to get going,” he said. “They all want to know what the result of this meeting is so they can get going and start tackling the recommendations.”

‘Finest Hour’

The HITT team, which began meeting in April 2018, is composed of 15 directors, members and regulators. They met 17 times, reviewing SPP’s cost-allocation model, transmission planning processes, the Integrated Marketplace and real-time operations. (See SPP’s Tariff Team Begins Carving up the Elephant.)

The group divided its recommendations into four categories: reliability; marketplace enhancement; transmission planning and cost allocation; and strategic, the last of which included developing an energy storage white paper. Those recommendations have been parceled out to many of SPP’s stakeholder groups.

In praising the group’s work, Golden Spread Electric Cooperative’s Mike Wise pointed to SPP’s nearly $10 billion in transmission investment that have left consumers with “very high fixed costs … embedded in their rates” and a footprint that touches Canada and nearly Mexico.

“I’ve been involved with SPP for 23 years,” he said. “This really is SPP’s finest hour. I love what we have done.”

Kent, who likened the team’s work to eating an elephant (“one bite at a time”) was asked if the HITT had finished devouring the beast.

“There’s still a lot of work that has to happen in the stakeholder process to take these recommendations and turn them into implementable actions,” he said. “But we got enough bites to give good direction to the stakeholder groups to improve things to the benefit of the organization.”

The Markets and Operations Policy Committee is already working on creating a task force to address the HITT’s direction to develop a policy that “creates an appropriate balance” between the cost and value of SPP’s energy resources interconnection service (ERIS) and network resources interconnection service (NRIS) interconnection products, and generation with long-term firm service.

The task force would be composed of three or four representatives each from the Transmission and Supply Adequacy working groups, two members of the RSC’s Cost Allocation Working Group, and three or four independent power producers.

Of course, it could also potentially add yet another acronym to SPP’s lexicon: NED (NRIS, ERIS and Deliverability).